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(a) "Professional services" refer to services rendered by such persons as doctors, lawyers, accountants, architects, etc., for their customers or clients where the services meet particular needs of a specific client and only apply in the factual context of the client and the final product has no retail value in itself. For example, opinion letters, workpapers, reports, etc., are not in a form which would be subject to retail sales to customers. However, transfer of items in a form which would be subject to retail sales (e.g., artwork, forms, manuals, etc.) would not be considered professional services. The issue is one of fact which must be resolved in each situation.
(b) Creative ("idea") labor and design labor that do not result in tangible personal property that will be or can be sold are deemed professional services and, if charged separately and maintained separately in the taxpayer's books and records, are not includable in gross income.
(c) "Professional services" shall be deemed to include those items of tangible personal property which are incidental to the services rendered, provided such tangible personal property is "inconsequential."
(1) Incidental transfers of tangible personal property shall be regarded as "inconsequential" if:
a. The purchase price of the tangible personal property to the person rendering the professional services represents less than fifteen (15) percent of the charge, billing or statement rendered to the purchaser in connection with the transaction; and
b. The tangible personal property transferred is not itself in a form which is subject to retail sale.
(2) In cases where the tangible personal property transferred is deemed inconsequential, the provider of the tangible personal property so transferred is deemed the ultimate consumer of such tangible personal property, and subject to all applicable taxes imposed by this article upon such transfer.
(d) Examples:
(1) The transfer of paper embodying the result or work product of the services rendered by an attorney or certified public accountant is regarded as inconsequential to the charges for professional services.
(2) An appraisal report issued by an appraiser, reflecting such appraiser's efforts to appraise real estate, is regarded as inconsequential.
(3) Use of a hair care product on a client's hair by a barber or beautician in connection with performing professional services is usually inconsequential. On the other hand, if the barber or beautician supplies the customer with a bottle of the product for the client's use thereafter and without the professional's assistance, the transfer of the bottle of hair care product is deemed not inconsequential.
(4) If a mortician properly segregates his professional services from other taxable activities on his bill (invoice, contract), his gross income would include only the income derived from the sale of tangible personal property (caskets, cards, flowers, etc.) and rental, leasing or licensing of real and tangible personal property. His charges for professional services (embalming, cosmetic work, etc.) would not be includable in gross income.
(Ord. No. 6674, § 3, 3-23-87)
(a) "Monetized bullion" means coins or other forms of money manufactured or minted from precious metals or other metals and issued as legal tender or a medium of exchange by or for any government authorized to do so.
(b) Any coin shall be considered to have been transferred or acquired primarily for its "numismatic value" if the sale or acquisition price:
(1) Is equal to or greater than twice (2 times) the value of the metallic content of the coin as of the date of transfer or acquisition; and
(2) Is equal to or greater than twice (2 times) its face value, in the case of a coin which, at the time of transfer or acquisition, was legal tender or a medium of exchange of the government issuing or authorizing its issuance.
(Ord. No. 6674, § 3, 3-23-87)
Sales of merchandise acquired on consignment are taxable as retail sales. In cases where the merchant is acting as an agent on behalf of another dealer, sales of the consigned merchandise are taxable to the principal, provided the merchant makes full disclosure to customers that he is acting only as an agent for the named principal. However, when the principal is not deemed to be a dealer, such sales are considered to be those of the merchant and are taxable to him.
(Ord. No. 6674, § 3, 3-23-87)
(a) Fair Market Value of Parts and Labor Charges. The tax collector may examine the reporting of all transactions covered by this section to determine if an "arms-length" price is charged for the parts and materials. The applicable tax may not be avoided by pricing a part, which ordinarily sells to the customer at ten dollars ($10.00), at five dollars ($5.00) and including the difference as "service" or "labor." In the absence of satisfactory evidence supplied by the taxpayer as to industry or business practice, the tax collector may use the cost of the part or materials to the taxpayer marked up by a reasonable profit, to estimate the gross income subject to tax.
(b) Reserved.
(Ord. No. 6674, § 3, 3-23-87)
(a) Gross income from sales of warranty, maintenance and service contracts is exempt from the tax imposed by section 19-460.
(b) Transfers of tangible personal property in connection with a service, warranty, guaranty or maintenance agreement between a vendor and a vendee shall be subject to tax under section 19-460 only to the extent of gross income received from separately itemized charges made for the items of property transferred.
(c) The gross income derived from a maintenance insurance agreement, which agreement is entered into between the purchaser and any person other than the seller is not subject to tax imposed by section 19-460. If the provider of the maintenance insurance agreement pays for tangible personal property on behalf of the insured in the performance of the agreement, such sales are subject to all applicable taxes imposed by this article.
(d) Charges for tangible personal property provided under the terms of a warranty, maintenance or service contract exempted under section 19-465 are subject to tax as retail sales.
(e) However, gross income received by a dealer from a manufacturer for work performed under a manufacturer's warranty is not taxable under section 19-460.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8784, § 31, 12-2-96)
(a) The sale of a "container" or similar packaging material which contains personal property and which is transferred to the customer with the sale of the product is not taxable as a sale for resale. Examples of such nontaxable containers include, but are not limited to:
(1) Packaging materials sold to a manufacturer of video equipment for containment of the product during shipment.
(2) Cellophane-type wrap sold to a meat department or butcher for containment of the individually wrapped or contained meat.
(3) Bags used to contain loose fungible goods such as fruits, vegetables and other products sold in bulk, where such bags or containers are used to contain and measure the amount purchased by the customer.
(4) Shopping bags and similar merchandising bags sold to grocery stores, department stores or other retailers.
(5) Gift wrappings and gift boxes sold to department stores or other retailers.
(b) Sales of nonrefundable or disposable paper (and similar products such as plastic or styrofoam) cups, lids, plates, bags, napkins, straws, knives, forks and other similar food accessories to a restaurant or others taxable under section 19-455 for transfer by the restaurant to its customer to contain or facilitate the consumption of the food, drink or condiment are sales for resale and not taxable.
(c) Where a retailer imposes a charge for gift wrapping and the charge includes the container, paper, and other appropriate materials, the wrapping charge shall be considered a sale.
(d) Charges for returnable containers, where the charges are imposed on the customer, are subject to tax at the time of the transaction. A credit may be taken for the amount of refund after such refund is made.
(f) The sale of labels to a purchaser who affixes them to a primary container is a sale for resale and not taxable. Directional or instructional material included with products sold are considered to be part of the product and a sale for resale. However, the sale of items such as price tags, shipping tags, and advertising matter delivered to the customer in connection with the retail sale is taxable to the retailer as a retail sale to it, and is not exempt as a sale for resale.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 6938, § 28, 4-25-88; Ord. No. 8440, § 30, 1-23-95)
Aircraft acquired for use outside the state means aircraft, navigational and communication instruments, and other accessories and related equipment sold to:
(1) Any foreign government for use by such government outside of this state.
(2) Persons who are not residents of this state and who will not use such property in this state other than in removing such property from this state. This subsection also applies to corporations that are not incorporated in this state, regardless of maintaining a place of business in this state, if the principal corporate office is located outside this state and the property will not be used in this state other than in removing the property from this state.
(Ord. No. 6674, § 3, 3-23-87; Ord. No. 8440, § 31, 1-23-95)
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